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Is Bank of America's Slow Start in 2025 an Opportunity for Investors?
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Key Takeaways
BAC shares rose 2.2% in 2025, lagging Citigroup's 29.9% and JPMorgan's 19.7% gains.
BAC's expansion plans include 150+ new financial centers by 2027 and continued tech investment.
BAC authorized a $40B share buyback and raised its dividend 8% to $0.28 per share.
Bank of America (BAC - Free Report) shares have gained a modest 2.2% this year, trailing the broader market and key peers. Citigroup (C - Free Report) and JPMorgan (JPM - Free Report) have surged 29.9% and 19.7%, respectively, over the same period, highlighting BAC’s relative underperformance.
YTD Price Performance
Image Source: Zacks Investment Research
As one of the most interest rate-sensitive major banks, Bank of America saw its net interest income (NII) rise when the Federal Reserve began cutting rates, easing deposit costs. In 2025, however, the Fed kept rates steady amid uncertainty over Trump’s proposed tariffs and broader macroeconomic headwinds. Now, as the labor market is weakening, market participants are projecting rate cuts to resume from September.
In the first half of 2025, Bank of America recorded 5% year-over-year growth in NII driven by decent loan demand, higher-for-longer interest rates and a robust deposit balance. The bank continues to see an upside in NII this year and expects NII growth in the range of 6-7%.
Bank of America: Other Factors to Consider
Branch Expansion & Digital Initiatives: Bank of America’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will drive NII growth over time. By 2027, it plans to expand its financial center network and open more than 150 centers. Of these, 40 are expected to be opened this year, and 70 more in 2026. The company also remains committed to providing modern and state-of-the-art financial centers through its ongoing renovation and modernization project.
Likewise, JPMorgan is doubling down on physical expansion to strengthen its competitive edge in relationship banking. In 2024, the company opened more than 150 new branches and remains on track to add 500 more by 2027.
Over the past few years, BAC has been renovating and updating its existing financial centers across the country for clients to engage with financial specialists and ensure a consistent and modern experience across all centers. The bank's strategic investment in new financial centers and expansion into new markets reflect a broader industry shift toward optimizing branch networks to deepen customer relationships and tap into new business opportunities. In this competitive environment, the ability to blend digital convenience with in-person expertise is expected to give Bank of America long-term leverage in the evolving banking landscape.
The company plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.
Fortress Balance Sheet & Solid Liquidity: Bank of America’s liquidity profile remains solid. As of June 30, 2025, average global liquidity sources were $938 billion. Also, the company’s investment-grade long-term credit ratings of A1, A- and AA- from Moody’s, S&P Global Ratings and Fitch Ratings, respectively, and a stable outlook facilitate easy access to the debt market.
BAC continues to reward shareholders handsomely. The company has cleared this year’s stress test conducted by the Fed and raised the dividend by 8% to 28 cents per share. In the last five years, it hiked dividends five times, with an annualized growth rate of 8.72%.
Similarly, JPMorgan and Citigroup cleared their stress test and announced plans to increase quarterly dividends. JPMorgan intends to declare a quarterly dividend of $1.50 per share in the third quarter of 2025, representing a rise of 7% from the prior payout. Further, Citigroup announced an increase in its quarterly dividend by 7% to 60 cents per share.
Additionally, Bank of America has announced a new share repurchase plan. Under this, the company is authorized to buy back shares worth $40 billion, which became effective from Aug. 1. As of June 30, 2025, the previous program had almost $9.1 billion in repurchases remaining.
Weak Investment Banking (IB) Business: As global deal-making came to a grinding halt at the beginning of 2022, it weighed substantially on Bank of America’s IB business. Though the company’s total IB fees plunged 45.7% in 2022 and 2.4% in 2023, the trend reversed in 2024. Thus, the company’s IB fees soared 31.4% year over year.
This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day'. Given the headwinds in the first half, Bank of America’s IB fees declined 6% year over year.
After the initial setback, deal-making activities are regaining momentum, with many deals that were put on hold resuming as there is more certainty about the direction of the economy and tariff plans as capital remains available. This will act as a tailwind for Bank of America, JPMorgan and Citigroup, which generate billions in revenues from M&A advisory fees.
Deteriorating Asset Quality: Bank of America’s asset quality has been weakening. While the company recorded negative provisions in 2021, a substantial jump in provisions was recorded in the years after that because of the worsening macroeconomic outlook. The metric surged 115.4% in 2022, 72.8% in 2023 and 32.5% in 2024. Similarly, net charge-offs grew 74.9% in 2023 and 58.8% in 2024. The uptrend for both continued in the first half of 2025.
As interest rates are less likely to come down substantially in the near term, it is expected to hurt the borrowers’ credit profile. The company remains vigilant about the effects of continuous high rates and quantitative tightening on its loan portfolio. Also, the impact of tariffs on inflation is likely to be seen. Hence, the company’s asset quality is expected to remain subdued.
Buy, Sell or Hold Bank of America Stock?
Over the past month, the Zacks Consensus Estimate for earnings for 2025 has moved marginally north to $3.68. On the other hand, the consensus estimate for 2026 earnings has been revised slightly lower to $4.27. The consensus estimate for earnings indicates 12.2% and 16.2% growth for 2025 and 2026, respectively.
Bank of America Earnings Estimates
Image Source: Zacks Investment Research
Bank of America stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 1.66X, which is below the industry’s 2.87X. This shows the stock is inexpensive.
Price-to-Tangible Book Ratio (TTM)
Image Source: Zacks Investment Research
BAC stock is inexpensive compared with JPMorgan, which has a P/TB of 2.94X. On the other hand, it is trading at a premium compared with Citigroup’s P/TB of 1.00X.
Bank of America's global presence, diversified revenue streams, ongoing branch openings, relatively high interest rates and technological innovations aimed at attracting and retaining customers provide a strong foundation for organic growth. Further, attractive valuation makes the stock a compelling option for investors.
However, BAC faces near-term challenges, including macroeconomic ambiguity because of the imposition of tariffs and its impact on interest rates. Subdued IB business performance and deteriorating asset quality are other major concerns. So, investors must wait for clarity on macroeconomic issues before buying the stock.
Image: Bigstock
Is Bank of America's Slow Start in 2025 an Opportunity for Investors?
Key Takeaways
Bank of America (BAC - Free Report) shares have gained a modest 2.2% this year, trailing the broader market and key peers. Citigroup (C - Free Report) and JPMorgan (JPM - Free Report) have surged 29.9% and 19.7%, respectively, over the same period, highlighting BAC’s relative underperformance.
YTD Price Performance
Image Source: Zacks Investment Research
As one of the most interest rate-sensitive major banks, Bank of America saw its net interest income (NII) rise when the Federal Reserve began cutting rates, easing deposit costs. In 2025, however, the Fed kept rates steady amid uncertainty over Trump’s proposed tariffs and broader macroeconomic headwinds. Now, as the labor market is weakening, market participants are projecting rate cuts to resume from September.
In the first half of 2025, Bank of America recorded 5% year-over-year growth in NII driven by decent loan demand, higher-for-longer interest rates and a robust deposit balance. The bank continues to see an upside in NII this year and expects NII growth in the range of 6-7%.
Bank of America: Other Factors to Consider
Branch Expansion & Digital Initiatives: Bank of America’s aggressive branch expansion across the United States as part of a broader strategy to solidify customer relationships and tap into new markets will drive NII growth over time. By 2027, it plans to expand its financial center network and open more than 150 centers. Of these, 40 are expected to be opened this year, and 70 more in 2026. The company also remains committed to providing modern and state-of-the-art financial centers through its ongoing renovation and modernization project.
Likewise, JPMorgan is doubling down on physical expansion to strengthen its competitive edge in relationship banking. In 2024, the company opened more than 150 new branches and remains on track to add 500 more by 2027.
Over the past few years, BAC has been renovating and updating its existing financial centers across the country for clients to engage with financial specialists and ensure a consistent and modern experience across all centers. The bank's strategic investment in new financial centers and expansion into new markets reflect a broader industry shift toward optimizing branch networks to deepen customer relationships and tap into new business opportunities. In this competitive environment, the ability to blend digital convenience with in-person expertise is expected to give Bank of America long-term leverage in the evolving banking landscape.
The company plans to continue strengthening its technology initiatives and spend heavily on these. These efforts help it attract and retain customers and boost cross-selling opportunities.
Fortress Balance Sheet & Solid Liquidity: Bank of America’s liquidity profile remains solid. As of June 30, 2025, average global liquidity sources were $938 billion. Also, the company’s investment-grade long-term credit ratings of A1, A- and AA- from Moody’s, S&P Global Ratings and Fitch Ratings, respectively, and a stable outlook facilitate easy access to the debt market.
BAC continues to reward shareholders handsomely. The company has cleared this year’s stress test conducted by the Fed and raised the dividend by 8% to 28 cents per share. In the last five years, it hiked dividends five times, with an annualized growth rate of 8.72%.
Similarly, JPMorgan and Citigroup cleared their stress test and announced plans to increase quarterly dividends. JPMorgan intends to declare a quarterly dividend of $1.50 per share in the third quarter of 2025, representing a rise of 7% from the prior payout. Further, Citigroup announced an increase in its quarterly dividend by 7% to 60 cents per share.
Additionally, Bank of America has announced a new share repurchase plan. Under this, the company is authorized to buy back shares worth $40 billion, which became effective from Aug. 1. As of June 30, 2025, the previous program had almost $9.1 billion in repurchases remaining.
Weak Investment Banking (IB) Business: As global deal-making came to a grinding halt at the beginning of 2022, it weighed substantially on Bank of America’s IB business. Though the company’s total IB fees plunged 45.7% in 2022 and 2.4% in 2023, the trend reversed in 2024. Thus, the company’s IB fees soared 31.4% year over year.
This year has had its share of hiccups. It began on an optimistic note, although the market sentiment cooled after Trump’s tariff policies launched on 'Liberation Day'. Given the headwinds in the first half, Bank of America’s IB fees declined 6% year over year.
After the initial setback, deal-making activities are regaining momentum, with many deals that were put on hold resuming as there is more certainty about the direction of the economy and tariff plans as capital remains available. This will act as a tailwind for Bank of America, JPMorgan and Citigroup, which generate billions in revenues from M&A advisory fees.
Deteriorating Asset Quality: Bank of America’s asset quality has been weakening. While the company recorded negative provisions in 2021, a substantial jump in provisions was recorded in the years after that because of the worsening macroeconomic outlook. The metric surged 115.4% in 2022, 72.8% in 2023 and 32.5% in 2024. Similarly, net charge-offs grew 74.9% in 2023 and 58.8% in 2024. The uptrend for both continued in the first half of 2025.
As interest rates are less likely to come down substantially in the near term, it is expected to hurt the borrowers’ credit profile. The company remains vigilant about the effects of continuous high rates and quantitative tightening on its loan portfolio. Also, the impact of tariffs on inflation is likely to be seen. Hence, the company’s asset quality is expected to remain subdued.
Buy, Sell or Hold Bank of America Stock?
Over the past month, the Zacks Consensus Estimate for earnings for 2025 has moved marginally north to $3.68. On the other hand, the consensus estimate for 2026 earnings has been revised slightly lower to $4.27. The consensus estimate for earnings indicates 12.2% and 16.2% growth for 2025 and 2026, respectively.
Bank of America Earnings Estimates
Image Source: Zacks Investment Research
Bank of America stock is currently trading at a 12-month trailing price-to-tangible book (P/TB) of 1.66X, which is below the industry’s 2.87X. This shows the stock is inexpensive.
Price-to-Tangible Book Ratio (TTM)
Image Source: Zacks Investment Research
BAC stock is inexpensive compared with JPMorgan, which has a P/TB of 2.94X. On the other hand, it is trading at a premium compared with Citigroup’s P/TB of 1.00X.
Bank of America's global presence, diversified revenue streams, ongoing branch openings, relatively high interest rates and technological innovations aimed at attracting and retaining customers provide a strong foundation for organic growth. Further, attractive valuation makes the stock a compelling option for investors.
However, BAC faces near-term challenges, including macroeconomic ambiguity because of the imposition of tariffs and its impact on interest rates. Subdued IB business performance and deteriorating asset quality are other major concerns. So, investors must wait for clarity on macroeconomic issues before buying the stock.
Those who own Bank of America stock can retain it for long-term gains. At present, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.